Are Small Businesses Important to the US Economy?

Today (11/28/2015) is still Thanksgiving Week, which includes Thanksgiving Day, Black Friday, Small Business Saturday, and Cyber Monday. Small Business Saturday was the brainchild of American Express in 2010, and has been growing in popularity and participation ever since. The usual definition of “small business” is less than 500 employees.

Small businesses are critical to the American economy. Here are some statistics to demonstrate that importance (2011 Census numbers):

99.7% of American businesses are classified as small by that definition

Businesses with less than 20 employees make up 89.8% of American businesses

46% of GDP comes from small businesses with private non-farm payrolls

Small businesses account for 63% of net new jobs

48.5% of American workers are employed in small businesses

Small business employees receive patents 16 times more often than those in large firms

98% of goods exporters are companies with under 500 employees

13.6% of small business owners are foreign-born

Small businesses are being threatened by government regulation, taxes, escalating benefits costs, and a shrinking qualified labor supply. Obamacare is a contributor, but other significant challenges are also present. Self-employed entrepreneurs are especially challenged, and their numbers are falling.

Payroll taxes, marginal income tax rates, regulations, permits, and competition from large business for employee benefits are crushing the ability to attract qualified employees to grow a small business. Getting Washington, D.C. under control will be a huge challenge for potential entrepreneurs.

Van Wie Financial is an example of a small business that had to jump through hoops to get started (and that was primarily State licensing). No one appreciates small business more than we do. Think about shopping and spending locally with small business, not just on Small Business Saturday, but all year long.